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StubHub Sued for Hiding Cash Flow Woes
26 Nov
Summary
- StubHub faces a class action lawsuit over alleged hidden cash flow changes.
- Investors claim StubHub misled them during its $758 million IPO.
- Stock plummeted 56% after negative earnings report revealed cash flow issues.
A class action lawsuit has been filed against StubHub, accusing the ticketing giant of concealing significant cash flow changes from investors prior to its September initial public offering. The suit, lodged in New York federal court, alleges that crucial financial information was omitted from regulatory filings.
This legal action follows StubHub's recent earnings report, which disclosed a negative free cash flow of $4.6 million, a stark contrast to the previous year's positive $10.6 million. This revelation led to a sharp market reaction, with the company's stock price falling by 56% from its IPO value.
The lawsuit, brought on behalf of an investor who purchased shares during the IPO, seeks damages for significant financial losses incurred by traders. It targets StubHub, its executives, and the banks that underwrote the offering, alleging that positive statements about the company's prospects were materially misleading.
